Cash Keeps Clout in Credit-loving America
Jun 29, 2023
Demand for cash remains stable in America, with banknotes and coins used for 18 percent of payments throughout 2022, says the Federal Reserve Bank of San Francisco.
The latest Diary of Consumer Payment Choice shows credit card use is trending upward, occupying top slot in payment methods and representing 31 percent of all payments in 2022. By comparison, cash and debit card usage has remained steady, largely matching their 2020 and 2021 levels.
The value of cash people typically carry in their wallet has increased by $5, reaching an average of $73 in 2022 versus $68 in 2021. Overall cash holdings also remain elevated (relative to pre-pandemic figures) seeing a two percent rise to reach an average of $418 in 2022. In contrast, the use of mobile payment apps has plateaued, representing around one percent of payments in 2021 and 2022 after enjoying a brief high of three percent in 2020.
Kathleen Young, Executive Vice President of the Federal Reserve Bank of San Francisco, highlighted the steady, ongoing demand for cash across America in a news release discussing the latest Diary findings.
Consumers have continued to use credit cards—the most used payment method in 2022—more often. Nonetheless, cash accounted for approximately 20 percent of all consumer payments since 2020, and this enduring demand indicates that there are consumers who need or choose to use cash, underscoring the need for a strong and resilient payments system.
The study also stresses the essentiality of cash for America’s unbanked population, estimated to be around 5.9 million households (or 4.5 percent of all households). While the share of consumers with a bank account using cash for purchases has dropped to 17 percent, the opposite trend was observed among unbanked consumers, with cash use rising from 55 percent in 2019 to 66 percent last year.